The Japanese Ministry of Economy, Trade and Industry announced production statistics for Jan-Nov’17 and the domestic sales volume in Nov’17 increased by 8.7% (or 4,172 MT) in comparison to Nov’16, an 11th consecutive monthly increase in 2017.

In addition, the average selling price rose by 19% to 371,000 Yen/MT Y-o-Y in Nov’17. However, compared with the previous month, the average domestic selling price has fallen by 4.8%.

In Japan, the volume of graphite electrodes produced in Nov’17 decreased by 3.3% in comparison to Nov’16 but witnessed an increase of 1.9% over the previous month – Oct’17.

Source: IRU, Ministry of Economy, Trade and Industry

Export supply of the electrodes from China has dwindled substantially as the government has implemented production cuts to curb atmospheric pollution. The global buyers thus have been forced to look at alternate markets, such as India and Japan.

Simultaneously, the shortage of Needle Coke, arising on account of the stronger demand from the Lithium Ion industry, also has been adding fuel to the fire.

The Chinese government also has cut steel production on pollution concerns, thus lowering supply to the global markets.

During 2017, steel exports from China sank by 31% on the year-on-year basis—the lowest in the last four years. This has prompted the global steel makers to ramp up their production.

In the global steel production spree, Electric Arc Furnace route is being increasingly implemented, mainly to avoid atmospheric pollution entailed in the Blast Furnace method. Typically, around 1.8 to 2 Kg of the electrode is required to manufacture 1 tonne of steel.

The global demand and supply gap for Graphite Electrodes is set to widen substantially in the coming days as the consumption will increase amid supply tightness.

And without any new capacity additions for neither Needle Coke nor the electrodes in the near future, the demand and supply gap will in fact widen further to exert further upward momentum to the electrode prices.